9 minutes
When you’re investing in physical branches, it pays to gaze deeply toward the future and try to build according to what you see.
Notably, there isn’t a crystal ball that shows exactly what lies ahead for CUbranches, nor defines just the right square footage, ambiance, technology, and staffing for each location. However, there are sure and seasoned strategies for creating a branch prototype. These strategies can turn every location into a dynamic, efficient branch, one that emanates the CU’s singular brand.
“The branch prototype is what your team invests time and effort in developing so retail facilities are accurate and consistent when deployed,” says Bob Saunders EVP/partner at Momentum, a plan-design-build firm based in Seattle and Pittsburgh. “The process collects and organizes all of that effort, and communicates ideas to your organization and membership. It’s the summation of every component in the creation and design of your branch.”
Paul Seibert, CMC, principal/financial and retail design in CUES Supplier member EHS Design, a NELSON Company, Seattle, explains further:
“The prototype translates the brand, business goals and cultural objectives into a physical model and member and staff experience,” he says. “The prototype process produces a set of written and rendered documents that defines the rationale behind the design and become the guidelines required to successfully apply the [prototype ideas] to every physical delivery system, while creating a seamless connection to the omni-channel environment.”
In all, “it’s the visceral expression of your brand through the member and staff experience,” he adds. “It presents and embodies your image.” This includes voice, style, culture, and value proposition by creating the “wow” in terms of design, staff and member success, online connection, as well as high efficiency and productivity. It also will be flexible, so it can deliver a strong ROI today and well into the future. And, it will create a consistent member experience throughout the entire network.
Cases in Point
For 10 years, $3.7 billion/40,000-member BlueShore Financial, N. Vancouver, British Columbia, has been putting in practice its “financial spa” prototype that EHS Design helped develop.
“We’ve been able to laser in on the member experience using a specialized prototype that takes the member on a journey,” says Chief Information Officer Fred Cook. “There’s not an end destination, but a connection to the member’s lifestyle established through the prototype.” For BlueShore Financial, that connection to the member is created by providing an intimate spa experience: warm, inviting, yet professional.
$747 million/69,000-member 3Rivers Federal Credit Union, Fort Wayne, Ind., worked with Momentum to develop its branch prototype with brand, function, and community focus resonating at every level. The prototype also underscores a shift in the credit union’s culture from a transaction-based institution to one seeking much deeper member relationships. The credit union took advantage of market conditions and optimized its impact in metro Fort Wayne by strategically deploying the prototype at multiple locations, guided by an updated market study.
“We began the process by visiting the types of businesses we wanted to emulate, not just financial institutions,” says Project Administrator Tiffany Yoquelet, a CUES member. “We’re partial to the Starbucks experience, and the way office furniture manufacturer Haworth Inc. (Holland, Mich.) lives its brand. We went on site to both and toured many more companies online.”
Prototyping Process
The leader’s vision will play a pivotal role in prototype development; however, perspectives from across the CU are needed to be truly successful. Saunders recommends the branch prototype development team include representatives from the C-suite, HR, IT, member services, and your most forward-thinking branch staff.
“It takes a concerted effort to gain the proper amount of input required for developing a successful prototype,” he says. “Everyone has unique, and often differing, perspectives. This broad level of participation enables the credit union to determine the best strategy for success, ensuring all voices are heard, and the path to success is clear and unfiltered.”
Early in the planning, Saunders’ team assists clients in developing a mission, or charter statement. During this exploratory process, the team asks each stakeholder to define success, identify risks, and assign responsibilities.
“We’ll conduct an in-depth question-and-answer session, and subsequently form the charter statement,” he explains. “This statement will help guide the credit union through the process of clearly articulating and aligning its overall goals and aspirations.”
Figuring out who your credit union is trying to reach and—ultimately—serve is one of the most crucial steps in developing a branch prototype, according to Seibert.
“Most credit unions started business with narrow groups of members,” explains Seibert. “For many, membership evolved beyond select employee groups into community charters. With today’s cost of doing business, tides are shifting, belts are tightening. While credit unions want to keep the ability to serve all consumers, more are becoming selective about the groups they wish to attract.” (BlueShore Financials’ “spa” concept, for example, caters to a fairly affluent member.)
Defining the needs of the target market can require hours of research, including analyzing marketing customer information file data, conducting stakeholder interviews, reviewing go-to-market strategies, and determining appropriate business models.
Getting a Good ROI
The cost of branching is high, according to Seibert, who says that a freestanding branch can exceed $2.5 million (with a large chunk of that being land costs). Operating costs are driven by both size and number of staff and typically exceed the yearly cost of facilities. Additionally, lost opportunity costs are often overlooked. A well designed and executed branch can increase productivity as much as 30 percent a year. In all, it pays to do your homework and realize the amount of staff effort required.
“By studying, researching, and understanding specific member needs, you can confirm which strategies work and are most impactful for members,” Saunders says. “The successful prototype will allow you to visually test ideas and determine the value to be gained by your investment.” This is often done using graphic design software.
As credit union leaders discuss what factors differentiate their institutions in the market, they begin to discover and define what success will look like for their CU. Is the measurement of growth limited to member penetration and market share? Are improvements in efficiency limited to better staff productivity?
“We must find ways, through proper design and workflow, to enhance an employee’s ability to engage the member and develop the relationship,” says Saunders. “The benchmarking and measurement of success indicators ensure that member service and satisfaction remain the ultimate goals of the prototype and its impact on the organization.”
At BlueShore Financial, while the number of members hasn’t increased significantly since the prototype was developed in 2004, the CU’s assets have grown to more than $3.3 billion from $1 billion.
“The increase in assets came from shifting in strategy to a share-of-wallet focus with emphasis on a deepening relationship with emerging wealthy and mass affluent households, as well as an increased focus on business and retail relationships,” Cook explains. “The share-of-wallet strategy applied to the existing market and the evolving member base, resulting in higher deposit, loan and investment balances.”
Cook advises looking closely at all the business intelligence available, and determining which segments are providing profit and which are not. CUs will all have varying and unique goals, but the process of identifying influencers and ranking their importance is the same.
Taking it Network-Wide
Some CUs may only implement the branch prototype in one or two of their branches. Or, like BlueShore Financial, a CU may determine the need to renovate every branch for a new target market.
With a market footprint of 17 branches and two corporate buildings, 3Rivers FCU took seven years to integrate its branch prototype fully throughout the network.
“We built six branches and two corporate offices in under two years,” Yoquelet says. “Some existing locations, because of size or layout, haven’t been fully converted, but we’ve incorporated as many enhancements as possible. The physical transformation lays the groundwork; it’s the evolution of staff culture that leads to the true shift in how we serve members.
“3Rivers is unique in that the multi-faceted project required deployment of the prototype at an extraordinary level, six concurrent projects, all while developing a state-of- the-art corporate campus,” she adds. “Critical issues such as design expectations, delivery timelines, and budgets were addressed well in advance of groundbreaking dates.”
3Rivers FCU developed a financial model and individual branch ROI that coordinated with a five-year strategic branch plan. The plan included demographic research, industry trends, and a competitive market analysis. The information was used to refine the design and technology elements, implemented on the basis of market demand and timing. The CU is now one of the top three recognized financial brands in the Fort Wayne market, and asset size has almost doubled since deploying its first prototype in 2009.
Consulting fees for branch prototype development usually depend on the level of design services required and the process involved, as well as the CU’s asset size and organizational complexity.
“A prototype can be developed at a relatively low cost if the credit union just wants an attractive design from a reasonably qualified architect,” offers Seibert. “Or, it can engage a design-build contractor who receives a lower fee initially and the remainder as part of future construction cost. Finally, a CU can employ a highly qualified consultant with national expertise and pay a larger design fee up front, but lower overall project costs long-term.”
Similarly, a range of costs can be incurred when a branch prototype is deployed. Interior branch renovation can be $150 per square foot. Most renovation projects run $200 to $275 per square foot. At the high end, costs can reach $350 to $450 per square foot. BlueShore Financial invested $375 per square foot, but realized significant asset growth in the following decade.
Can Pretty Fail?
Some CUs make the mistake of giving too much credence to aesthetic appreciation. Rather, success in branch prototyping should encompass the credit union’s preferred business model and advantageous workflow for a high level of staff performance.
“There are many different ways to measure success,” says Seibert. “Factors may be member growth, awareness of products and services, member advocacy scores and staff satisfaction; or, [it may be] increasing revenue, share of wallet or ROI. Pretty is easy. But pretty can fail. The real test is performance.”
For 3Rivers FCU, crafting a more natural member experience was the overarching goal that it saw when it looked into its facilities “crystal ball.”
“We wanted the experience to be casual and friendly, not stodgy or dry,” explains Yoquelet. “Creating open areas of space where members could interact or relax was essential. It was also vital that we encourage a higher quality of conversation.”
Determining member needs was critical, as was getting team members on board. “It’s not just important to have team members embrace the prototype,” says Yoquelet. “It’s mission-critical. If they don’t love us, our members never will.”
Stephanie Schwenn Sebring established and managed the marketing departments for three CUs. As owner of Fab Prose & Professional Writing, she helps CUs and industry suppliers with their communications needs.
